Recently I went an entire week without taking any money out of the bank. Every single one of my purchases was done online, via digital transfers using my bank’s app, or with my bank card in stores.

There are definite advantages to living this way, the most important being my ability to track my spending. For example, my bank’s app has a ‘summary’ function that looks at my purchases and sorts them by type of company, dividing them up into categories and months. It then tells me what it thinks I will spend this month and how much left I have in my budget.

Back in the late 90s when I was saving for a house, my budgeting was based on putting specific amounts of money into envelopes labeled with categories. When the envelope was empty, I couldn’t spend any more in that category.

Things have changed a little bit since, then, haven’t they?

Here in Spain, paying by cell phone is becoming more and more popular — you just position your phone near the store’s terminal and a wallet app opens, allowing you to confirm the payment. Again, each transaction is then automatically recorded, so you can later review what you spend and where.

Is there a downside to all of this?

That depends on what you think about personal privacy and data mining. For example, each time I purchase an ebook on Amazon or a flight via an online operator, my Facebook feed fills up with ads for similar books and vacations. It’s a bit disconcerting to think that companies track my spending and use it to advertise to me, but for me, it’s a small price to pay for the convenience.

If I were still running my own business, I’d be thrilled with the detailed tracking of my expenses. Instead of hours of input into whatever financial program I was using, I could simply open up an app and see exactly what I’ve spent and where. If I had separate bank accounts for personal and business spending, I wouldn’t even need a financial program anymore, as it would be all there for me to see and consult whenever I (or my accountant) needed to.

What do you think? How much actual cash do you spend these days? Is the digitization of money a good thing? Will paper money disappear at some point?

9 Comments for “Is money becoming obsolete?”

I still use some cash for small items. The money in the bank is cash, too, of course, but I understand your comments. The surprising thing is that fewer and fewer places will take checks. So we whip out the credit card. It’s also surprising how quickly the balance adds up, too. But all the advertising I get based on either my purchases or just my browsing doesn’t bother me in the least. I still don’t have a cell phone and I don’t do Facebook. I imagine it might be surprising I don’t insist on gold coins.

Certain purchases people want privacy by using cash. Some stores that have previously been breached (Target, TJMXX, Home Depot, etc.) I will only use cash at these places. I don’t use social media, (no time) or give out my phone # at stores when asked. I shun most loyalty cards.

Also I use cash when I buy merchandise at rock concerts. The musicians, all of them but especially the mid-level and small bands, use the cash as their travel money, and it takes longer for them to get their hands on the money from the credit cards. If I’m making a big purchase I resort to the credit card, but if it’s only a CD or a tshirt I bring along cash.

Banks and credit card companies are extremely sensitive to security issues regarding credit cards and (presumably) debit cards. Likewise, larger corporations that do a great deal of on-line business are equally sensitive to these problems, too, although it doesn’t prevent all problems. Only yesterday we received a notice from Rand-McNally that they had experienced a security breach and were notifying us of the incident. We bought a single map from them about three years ago and in that time have received a new credit card. Still, it is a comfort that people are paying attention. Not everything that goes wrong is intentional, either. Sometimes there are simple human mistakes.

I still use cash for smaller purchases. A couple of stores I visit have signs requesting cash for purchases under $20 due to fees charged by card companies. I don’t remember right now if it’s debit card or credit card fees that are the problem for them.

I’m considering changing back to cash for gas purchases, since those seem to be the least secure locations for things like card skimmers to be installed.

I’ve gradually transitioned to paying most of my bills automatically, either by credit card or direct bank withdrawal. I use very few checks and until recently very little cash. I joined my local food coop a few months ago, and pay with cash there to save them the credit card fee. Otherwise I mostly use my credit card for purchases, because of the reward program. I did find it a hassle a couple of months ago when my credit card company cancelled my card without notice, because they detected a security issue. I had to change the payment information for all the bills that get charged to that card. In the shuffle, my electric bill did not get set up for recurring payments, and I didn’t realize that until a few days before I was about to get cut off. So there are trade-offs. I do have notifications set up for my credit card, so I get notified if there are more than 3 charges in a day, or any charges over $ 100.00.

We have gone for months at a time without using cash. Anymore, we really only use cash at the farmers market, which has just started up again. Even vending machines and parking meters are taking cards now.

I haven’t even been in a bank since last fall, since I can deposit checks via their app. My husband and I have had one fraudulent charge, and the bank cleared it up very quickly.

We use Mint to track all of our purchases, and check it daily, so we know where our money is going. We use two-factor authentication whenever possible, and don’t use the same password for multiple sites (we use 1Password to generate and store secure passwords).

For reference, we are both in our early 30s.

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